Crypto futures ETFs debut in Hong Kong to lukewarm interest after market turmoil from FTX collapse
- CSOP introduced bitcoin and ether exchange traded funds in Hong Kong, the first in the city after the government committed to becoming a virtual asset hub
- The funds rose less than 0.5 per cent on Friday as plummeting crypto values this year, worsened by FTX’s collapse, loom over the market
Two exchange traded funds (ETFs) for bitcoin and ether futures debuted in Hong Kong on Friday to tepid interest from investors amid an ongoing cryptocurrency market rout as the city forges ahead with its plans to become a virtual asset hub.
CSOP Asset Management’s Bitcoin Futures ETF (3066) and Ether Futures ETF (3068) both rose 0.45 per cent for the day to HK$7.8 (US$1). The funds saw an uptick in trading activity towards the end of the day after a slow morning. The bitcoin fund rose 0.2 per cent in its first hour and the ether fund fell 0.2 per cent.
The bitcoin ETF ended the day with a trading volume of 823,400 shares and the ether ETF reached 440,500.
The funds outperformed their respective assets for the previous 24 hours, with bitcoin down 1 per cent and ether down 0.8 per cent, according to CoinGecko.
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The ETFs are the first of their kind in Hong Kong, launching one month after the city government announced plans to boost development of virtual assets, including allowing for greater retail participation through a new licensing regime and allowing public offerings of virtual asset futures ETFs with exposure to cryptocurrencies.
CSOP’s two cryptocurrency funds track bitcoin and ether futures listed on the Chicago Mercantile Exchange (CME) in the US.
These “deeply liquid benchmark futures contracts” give retail investors exposure to virtual assets without having to directly purchase the underlying cryptocurrency, CSOP said in a statement. Product descriptions also emphasise the funds as a transparent and regulated way to capture bitcoin and ether performance.
However, the funds come at an awkward time for the industry, as a market rout this year was exacerbated following the collapse of FTX, once the world’s second-largest cryptocurrency exchange. The exchange’s bankruptcy on November 11 sent shock waves through the industry and led to the meltdown of multiple other platforms with exposure to FTX.
The exchange, which started in Hong Kong but moved to the Bahamas last year because of the archipelago’s friendlier crypto policies, entered a downward spiral last month and quickly collapsed following revelations that it loaned user assets to its affiliated trading firm Alameda Research.
Its 30-year-old founder Sam Bankman-Fried was arrested in the Bahamas and faces extradition to the US, where the Securities and Exchange Commission (SEC) charged him with defrauding investors and “orchestrating a massive, years-long fraud” that diverted billions of dollars of customer funds “for his own personal benefit”.
Bitcoin has lost more than 60 per cent of its value from its peak in December last year, while ether also tumbled nearly 70 per cent over the same period.
Hong Kong has stayed the course it laid out ahead of this year’s FinTech Week on October 31, when it revealed a commitment to restoring the city’s status as a regional centre for virtual assets.
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